Big things will occur in transportation this year. First, transportation budgets will be increasingly impacted by the “War on Trucking.” With this war, and inflationary pressure in critical areas, the cost of trucking will continue to escalate, and carriers will be more disciplined in asking for and getting higher rates and accessorial charges.
Beyond issues such as the impact of the Compliance, Safety, Accountability program and a potential change in hours-of-service rules, carriers will experience significant cost increases in almost every area of their operations. Expect higher pay for drivers, especially in the truckload sector, as carriers deal with a looming driver shortage that will get worse over time. There also will be increases in the cost of equipment and insurance, especially health insurance.
Overall, the percentage increase in carrier rates will be much higher than in previous years, especially if there is any kind of economic recovery. Of course, if Europe goes in the tank, or the economy overall heads south, then all bets are off because this would affect freight volume.
Given the magnitude of carrier rate increases, the second major factor will be what shippers do to manage their transportation costs. This may not garner headlines, but smart shippers will look at all their options. For example, shippers will aggressively analyze customer service requirements to utilize mode-shifting techniques to lower costs. Illustratively, they will ask, “Can we aggregate orders and consolidate numerous less-than-truckload shipments into a truckload move, or is there an opportunity to shift truckload moves to intermodal?”
Expect pressure to change transportation practices and processes to lower costs. Maintaining the status quo isn’t an option because with higher rates, your CFO, or CEO may ask, “What happened?” Either have a good answer or a good resume!